In an interview with VG247 Lewis clarified that despite the rumours that Microsoft would react to Sony's move with a similar reduction, the company had no formal plans to cut the cost of its popular Xbox 360 games console.

"As you can imagine, we plan for these scenarios all the time," commented Lewis. "For me to sit here and say that was a big surprise would be a lie. Respect for what they do, of course. I love the competition, actually: it keeps us on our toes, and consumers benefit ultimately."

The cut was announced while Sony was in the midst of its GamesCom presentation.

The price reform saw Sony reduce the recommended retail price of its 160GB PS3 model from €299 to €249 and the price of its 320GB model from €349 to €299. This compares to Microsoft's current Xbox 360 devices, when paired with a Kinect the 4GB version of the Xbox 360 is available for €280 and the 250GB for €340.

Analysts have since speculated that Microsoft may come to regret the decision. Following the price cut reports have suggested that sales of the PS3 have sky-rocketed, seeing a 65 per cent increase in week-on-week sales levels.

The news came as tech site MCV reported that a "reliable retail source" had confirmed to it that since the price cut was implemented sales of the PS3 had dramatically increased. If true the news would mean that the cut had taken effect before Sony's marketing campaign had even begun.

"We think we offer great value now... We have better service provision than anybody. We attach more effectively than anybody. I think Xbox LIVE's enviable. What we've achieved with Kinect has given us growth that I think others would aspire to at this point in the lifecycle.

"We're happy with our position. While we're not complacent about the competition, I wouldn't trade places," commented Lewis when asked about the company's decision.